Dauphin County Launches Infrastructure Bank

Dauphin County's program is the first county infrastructure bank in Pennsylvania, and one of the first in the country.

Last year, Chicago garnered attention throughout the transportation community when it created an infrastructure bank. Now, it appears, counties are looking to get in on the action too.

Dauphin County, Pa. -- home to the state capital of Harrisburg -- is the first Pennsylvania county to create an infrastructure bank, and it appears to be one of the first in the country to do so as well.

County leaders say the idea of the infrastructure bank came about as a result of finally finishing work on repairing or replacing each of its more than 50 county bridges over the course of years. Finally, by next year, Dauphin won't have any structurally deficient bridges requiring special attention.

Dauphin, like all counties in Pennsylvania, receives a portion of gas tax revenue from the state government. While Pennsylvania counties own bridges -- but typically don't own roads -- that left Dauphin trying to figure out what to do with the money.

County leaders considered simply distributing the money to the 40 municipalities within its boundaries, but it was obvious that the sums would be so small that they wouldn't have a real impact, says Jeff Haste, chairman of the Dauphin County Commission. County leaders, working with the state department of transportation, decided a loan fund would have a bigger impact.

Under the new program, the county's 40 municipalities will be eligible to borrow a total of $30 million from the Dauphin County Infrastructure Bank over three years. The initial cash will come from the county's share of state gas tax money, about $1 million, with the rest coming from the Pennsylvania Infrastructure Bank.

The county's Gaming Advisory Board -- which currently recommends what the county should do with its portion of casino revenue -- will review applications and recommend to the county commission which projects it should approve.

The idea is to facilitate work that would be the final piece of the puzzle needed to launch important projects or developments. Haste cited the example of a mixed-use project taking shape in Londonderry Township that requires improvements to its intersections and storm water systems. "It was the missing piece of the project for years," Haste says.

Haste says the effort will help small local governments, which may have limited borrowing capacity, get loans at lower costs. They'll also be able to tap into other county resources like the county's engineering firm. The county would also streamline the permitting process for selected projects.

The program began accepting applications May 1 and will continue to accept them through Aug. 1. Projects will be reviewed in the fall and approved early next year, with construction happening later in 2014.

Government-sponsored projects could borrow at a 0.5 percent rate, and non-profits and private-sector borrowers would get a 1 percent rate. Those are lower than the interest rates they'd be able to get from the municipal bond market or from the state infrastructure bank. Borrowers would pay back their loans in 10 years or less.

Financing would be limited to surface transportation projects like road construction, widening and resurfacing as well as work on drainage, lighting, sidewalks, and traffic signals.

Joung Lee, a transportation finance expert with the American Association of State Highway and Transportation Officials, says large national and state programs designed to assist with infrastructure financing tend to primarily assist larger, complex projects; typically smaller-scale projects get grants. That's largely because it's difficult for the lowest levels of government to find revenue streams to pay back the loans.

Dauphin County officials say that municipalities awarded loans will have to pledge their portion of annual state gas tax revenue to the projects.